This website requires certain cookies to work and uses other cookies to help you have the best experience. By visiting this website, certain cookies have already been set, which you may delete and block. By closing this message or continuing to use our site, you agree to the use of cookies. Visit our updated privacy and cookie policy to learn more.
This Website Uses Cookies
By closing this message or continuing to use our site, you agree to our cookie policy. Learn More
This website requires certain cookies to work and uses other cookies to help you have the best experience. By visiting this website, certain cookies have already been set, which you may delete and block. By closing this message or continuing to use our site, you agree to the use of cookies. Visit our updated privacy and cookie policy to learn more.
Food Engineering logo
search
cart
facebook twitter linkedin youtube
  • Sign In
  • Create Account
  • Sign Out
  • My Account
Food Engineering logo
  • Home
  • Magazine
    • Current Issue
    • Digital Edition
    • Archives
  • Exclusives
    • Fabulous Food Plants
    • Plant Construction Survey
    • Plant of the Year
    • Sustainable Plant of the Year
    • State of Food Manufacturing
    • Top 100 Food & Beverage Companies
    • Web Exclusives
  • Topics
    • Latest Headlines
    • Automation
    • Cannabis
    • Case Studies/Field Reports
    • Columns
    • Dry Processing
    • Food Safety
    • Innovation
    • Packaging
    • Processing
    • Sustainability
    • Tech Update
  • News
    • Manufacturing News
    • New Products
    • People & Industry News
    • Plant Openings
    • Recalls
    • Regulatory Watch
  • Food Master
  • Resources
    • Classified Ads
    • Custom Content & Marketing Services
    • FE Store
    • Government Links
    • Industry Associations
    • Market Research
    • White Papers
    • Tech Flash E-newsletter
  • Events
    • Calendar
    • Food Automation & Manufacturing Conference & Expo
  • Multimedia
    • Interactive Spotlights
    • Videos
    • Photo Galleries
    • Podcasts
    • eBooks
    • Food Plant of the Future
    • Webinars
    • Food Engineering's Youtube
  • Contact
    • Contact Us
    • Advertise
  • Subscribe
Home » Managing Software:
Columns

Managing Software:

April 16, 2003
Reprints
No Comments
The 800-pound gorilla in the enterprise application software market may be appropriate for simple food plant operations, but can SAP make the move from simple to complex process plants?



With annual revenue reaching $7 billion, 32 percent market share and 13,000 implementations of its ERP product R/3 worldwide, SAP has established itself as the 800-pound gorilla in the enterprise application software market. Food company executives have taken notice and are wondering about the potential of SAP in the food industry, especially in plant applications.

SAP Vice President of Consumer Products E.J. Kenney, responsible for the company's food industry business, says that the food industry makes up approximately 16 percent of all SAP customers in the US and 10 percent worldwide. That translates into approximately 1,800 food companies worldwide and includes Nestle, Kraft, Kellogg, Hershey, Coca-Cola, Pepperidge Farm as well as a number of mid-sized companies.

SAP's software suite in the food industry includes solutions for financials, human resources and supply chain management. Many of SAP's food industry customers have invested extensively in these areas, but have not invested as much in SAP applications for manufacturing operations.

According to Kenney, about one third of the company's food industry customers have implemented SAP for manufacturing management in the plant. "Our consumer goods customers, including food customers, have chosen to implement the solutions that impact customers first, for example, order-to-cash applications. Then they move into manufacturing and supply chain planning."

Last fall Kara Romanow, a research analyst with AMR Research, wrote a report that addressed SAP in process plants. According to Romanow, approximately 4 percent of SAP process customers have installed SAP at the plant level. "Although my analysis dealt with the process industries, reviewing my information reveals that the food industry's numbers would not be different. Roughly 4 percent of SAP's food customers have installed in the plants." Even though the report was conducted a year ago, Romanow believes the number is now higher that 4 percent but not significantly so.

The AMR report showed that missing functionality was cited by 94 percent of SAP's process customers as the reason they have not adopted SAP in the plant. Despite the functionality included in SAP's manufacturing offerings, these customers claimed that the function did not go deep enough or did not exist at all. The functions cited as missing include adequate modeling of the process itself (byproducts and coproducts, disassembly, etc.) costing of complex processes and products, catch weight, management of material characteristics (brix, viscosity, fat percentage, etc.) and the inability to react to inconsistencies in the production process itself. These customers are using legacy or homegrown systems to manage their plants with integration to their SAP systems. The legacy and homegrown systems are highly customized to fit the specific nature of the plant and, in most cases, the cost and effort of replacing these systems outweigh any perceived benefit.

When asked about functionality, Kenney states, "SAP has a broad solution for the food plant that includes inventory management, recipe management, quality management, maintenance, accounting and human resources. SAP has been and continues to invest in more functionality for the plant including catch-weight, quality based available-to-promise to better utilize on-hand ingredients and finished goods, portal technology to simplify the user interface, event management to issue and react to alert conditions and more."

The AMR report looked at the impact on systems of different levels of complexity and variability in the plant. Within the food industry, a bottling plant is relatively simple and a meat processor (kill and further processing) is relatively complex. Romanow states that the level of process complexity and variability was the major determinant of the applications implemented in the process plant. The fill and pack operations have had success with SAP's R/3. More complicated operations like mix and pack, process reactions and disassemble use plant centric ERP and packaged or customer MES systems, she says. "SAP is more widely installed in simple operations and less so in more complex operations. Those companies with SAP corporate infrastructures are typically using other systems for the plant and feeding normalized data into R/3," according to Romanow.

SAP has had success in the beverage industry and its customers include Coca-Cola, Anheuser-Busch, Cadbury-Schweppes, Guinness, and the Boston Beer Company. The company has recently introduced SAP-Beverage which, in addition to managing the beverage plant, includes telephone sales, route accounting, route management, empties, excise duties, contract management, and rebates/bonus agreements.

Romanow found that SAP's success in the plant is primarily driven by the objectives of the enterprise. In those enterprises where integration and standardization are the primary drivers, plant level SAP systems are more prevalent. According to the AMR Report, "SAP implementations in these industries have been successful when standardization is ruthlessly enforced and integration is the business driver."

Is SAP a key vendor to the food industry? Absolutely. Is SAP right for a food plant? Maybe. As SAP continues to expand its functionality, it will be appropriate for more food plants as they move from simple to complex processes.

subscribe to Food Engineering

Related Articles

Managing Software: Is the food industry ready for Product Life Cycle Management?

Managing Software: The fatal flaws of software

Managing Software: Identify options if fatal flaws develop in ERP software

Managing Software: Integrating Maintenance into plant ERP software

You must login or register in order to post a comment.

Report Abusive Comment

Subscribe For Free!
  • Print & Digital Edition Subscriptions
  • eNewsletter
  • Online Registration
  • Subscription Customer Service

More Videos

Popular Stories

North Carolina Food Innovation Lab

North Carolina Food Innovation Lab takes aim at food production of the future

BKON's RAIN technology

RAIN uses vacuum cycles for extraction to occur at the deepest layers of coffee

Prestage Farms pork processing facility

How Prestage Foods of Iowa built a state-of-the-art pork processing plant

date labels

Much food waste comes from misinterpretation on product date labels

water sustainability

Reduce, reuse, recycle can help processors meet water usage goals

Food Master 2020

Events

April 26, 2020

Food Automation & Manufacturing Conference and Expo

FA&M logoFood Engineering's Food Automation & Manufacturing Conference and Expo (FA&M) is a 2 ½ day event that brings food and beverage processors and suppliers together to gain valuable information on the latest trends and technologies in manufacturing, automation, sustainability and food safety.

January 1, 2030

Webinar Sponsorship Information

For webinar sponsorship information, visit www.bnpevents.com/webinars or email webinars@bnpmedia.com.

View All Submit An Event

Poll

Severe Weather and the Supply Chain

How will this year’s severe spring weather affect your supply chain?
View Results Poll Archive

Products

Packaging Research in Food Product Design and Development

Packaging Research in Food Product Design and Development

Packaging Research in Food Product Design and Development is the first book to comprehensively address the issues of graphics design and visual concepts, from a systematic, scientific viewpoint, yet with business applications in mind.

See More Products

2019 Top 100 Food & Beverage Companies

Food Engineering

FE December 2019 cover

2019 December

In the December 2019 issue of Food Engineering, we take a behind-the-scenes look at Prestage Farms' new pork processing plant in northwest Iowa.
View More Create Account
  • Resources
    • Food & Beverage Brands
    • List Rental
    • Survey And Sample
  • Want More
    • Connect
  • Subscribe
  • Privacy Policy

Copyright ©2019. All Rights Reserved BNP Media.

Design, CMS, Hosting & Web Development :: ePublishing